Hot from the weakest month in a year in July, global oil futures started August on a similar note, losing 3%, falling under $US40 a barrel in New York, and dipping into bear territory.
US oil futures fell sharply Monday, hit by continuing concerns over the global supply glut. September West Texas Intermediate crude futures fell $US1.54, or 3.7%, to end at $40.06 a barrel.
That left it down 21.8% from its most recent peak in June. And it was after a 15% slide in July.
Gold edged higher by around $US2 to just over $US1,359 an ounce and silver ended at a two year high of $US20.50 an ounce, up 0.7% on the day.
Overnight futures trading on the ASX 200 will see our market start the day with a loss, thanks to the return of the bears to oil markets.
The price of many US and global oil companies took a hit overnight, so the prices of Woodside, Santos, Origin Energy and Oil Search will all take a hit today.
The Aussie dollar lost more than 0.6% of a cent to end around 75.50 US cents.
The US marker crude touched a session low of $US39.82 a barrel. Helping push prices lower were Friday’s report of yet another weekly rise in active US oil rig use – up 18% since the lows of April-May, large stocks of petrol, diesel and jet fuel and no sign the global crude glut is going away any time soon.
Brent crude, the global oil marker, dropped 3.2% to $US42.14 a barrel, down 20.1% from its last peak in June.
Since hitting fresh yearly highs in June, both Brent and WTI have now fallen by more than 20% – the common definition of a bear market — as a glut of crude and oil-related product supply has pushed down prices.
US crude stockpiles are higher than expected, Saudi output is projected to total 10.7 million to 10.8 million barrels a day in July and Russian supply is believed to be still rising and the continuing glut in US petrol supplies shows no sign of easing and remains bearish for crude.
Adding to the bearish pressure overnight was news that Saudi Aramco, Saudi Arabia’s dominant state-run oil group, had cut the price of crude sold to Asia.
Oil now remains more than 60% below June 2014 levels, when the prices started falling. That saw Brent crude bottom out at at $US26.21 at the start of the year, and peak at just over$US51 in June.
